ICE Brent crude futures hover at 2-month high amid tight supply

Crude oil futures were higher in mid-morning Asian trade May 27, with the ICE Brent crude marker hovering around a two-month high, as the near-term outlook for oil remained bullish with demand still seen outpacing supply.

At 10:22 am Singapore time (0222 GMT), the ICE July Brent futures contract was up 17 cents/b (0.14%) from the previous close at $117.57/b, while the NYMEX July light sweet crude contract was 17 cents/b (0.15%) higher at $114.26/b.

"Momentum is flat-out bullish, with many factors pointing to a tighter market, even more so with the EU on the precipice of a total ban on Russian energy," SPI Asset Management Managing Partner Stephen Innes said in a May 27 note.

Oil's recent push higher comes amid a recovery in sentiment in the broader financial markets. US equity indices rose for a second day May 26 after economic data showed US consumer spending was robust despite soaring inflation and tightening monetary conditions.

Analysts said this will calm fears of a recession as it shows the economy is resilient enough to weather a pullback of easy monetary policy by the Federal Reserve.

"The catalysts overnight come from another round of strong earnings from US retailers, along with a better-than-expected rise in personal consumption expenditures... for the second quarter, which have provided some relief that strength in US consumer spending is better-positioned to weather inflationary pressures and the Fed's ongoing tightening ahead," IG market strategist Yeap Jun Rong said.

Investor attention remains on the EU's potential ban on Russian oil imports, though talks so far have been stuck in deadlock.

With the US summer driving season about to kick off from May 30 and the fall in US gasoline stocks showing no signs of slowing, oil prices are poised for further upside, analysts said.

Dubai crude swaps and intermonth spreads were also higher in mid-morning trade in Asia May 27 from the previous close.

The July Dubai swap was pegged at $107.13/b at 10 am Singapore time (0200 GMT), up $2.84/b (2.72%) from the May 26 Asian market close.

The June-July Dubai swap intermonth spread was pegged at $2.82/b at 10 am, up 1 cent/b over the same period, and the July-August intermonth spread was pegged at $2.41/b, up 2 cents/b.

The July Brent/Dubai EFS was pegged at $10.57/b, up 31 cents/b over the same period.